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Monday, Aug 15, 2022
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REPORT—Valley Economy Is a Mixed Bag

The economic forecast for the San Fernando Valley and the state as a whole is not as bleak as headlines on the East Coast may make them out to be. But don’t get too comfortable. That’s the underlying message of a report from the so-called “guru of the L.A. economy,” Jack Kyser, chief economist with the Los Angeles Economic Development Corp. Kyser gave his report May 31 during the San Fernando Valley Info Summit 2001, sponsored by the Economic Alliance of the San Fernando Valley. He said the Valley has a combination of economic factors and challenges to either confront or, if nothing else, keep a watchful eye on. “You’re looking at an economic situation that has a lot of moving parts,” said Kyser. “We don’t expect a classic recession, but we are coming off of a very strong 2000, so there is the ‘velocity shock impact’ to consider.” Kyser said a long period of strong economic growth is ending and a long, steady readjustment period is beginning. Valley businesses were in no way immune to the fallout from the tech wreck of 2000. There are plenty of war stories told by those who are at the end of the dot-com bonanza-gone-bad, including executives whose companies folded outright, and those who faced significant restructuring just to stay afloat. But there is a silver lining. All told, Kyser said, the Valley is actually poised to be on the cutting edge of the next phase in the technology industry because of the number of businesses producing back-end or support products for the personal computer and high-tech industry. “There is a very strong tech sector in the west end of the Valley and people are concerned,” said Kyser. “But it’s a strange situation, because what we are doing is looking at the tech industry in a new way. The old-line tech companies, like Intel, Sun Microsystems and Hewlett Packard, have enormous backup inventories now. But there are firms in the Valley that are on the cutting edge and developing what we are calling ‘enabling technology,’ or backup technology for existing products. So you have to say technology never sleeps, and it certainly never sleeps in the West Valley. So while the larger companies now are forced to refocus, we appear to be on the right track.” No free energy passes Valley businesses fortunate enough to be on the Los Angeles Department of Water and Power’s billing list may not be as concerned about energy shortages, increased fees and looming blackouts this summer as those who are set up inside Southern California Edison territory. But they should be. “While businesses in Burbank, Glendale and Los Angeles may have their own power sources, the energy crisis is still an issue for other parts of the Valley, and to be good neighbors all businesses should do what they can to help,” said Kyser. “If you are in DWP territory but one of your suppliers is in Calabasas, for example, you have to be concerned, and you have to take measures to conserve because of threats on a state-wide level.” Kyser said there is reason to worry that the state budget will be consumed by the expenses the state is incurring by buying up very expensive electrical power. As a result, he said, every region of California has to be concerned about losing funding for public programs. Kyser suggested that those businesses that haven’t already done so begin immediately to implement energy-saving measures, including the use of alternative fuels, and taking advantage of incentive programs offered by the utilities. “Regardless of where you are, you will need to make sure you are energy-efficient and look at your overall operation to see how efficient it is as well,” Kyser said. Kyser also said that small businesses across the state have not been taken as seriously by Sacramento as they should or could be. He suggested that efforts at the local level must be made in order to reverse the situation. “Companies have to get involved with some kind of local business association, like the Valley Industry and Commerce Association or the United Chambers of Commerce,” said Kyser. “What we sense is the voice of business around the state is not being heard in Sacramento. We are a small- to medium-sized business base with differing concerns, and it is up to us to bring those concerns forward.” Secession can be consuming The Valley secession movement, said Kyser, will also need to be taken very seriously by local businesses, particularly with regard to political redistricting. And even if it doesn’t secede, Valley constituents will have to be vigilant to insure that the city council, now with two new Valley representatives and a new mayor, work to make council districts more reflective of communities. “The secession issue is going to take a lot of physical and psychic energy, and I think that it is going to be a long drive,” said Kyser. “But without a secession, you have to figure out how to get as many Valley-specific council districts as you can. You are going to need discrete and smaller districts in order to accommodate the needs of the different parts of the Valley and the businesses located there.” Promoting the Valley business community should also be a high priority, said Kyser, particularly now because of the bad press the state is getting due to the energy crisis and the “dot-gone” syndrome. Kyser said job growth in the Valley will be moderate over the next year, centered in the entertainment, technology and financial services sectors. He said Valley entertainment companies need to take seriously the ongoing threat of losing production business to states and other countries where labor costs are cheaper and there is less red tape. “There’s no question that one other issue that has to concern the Valley is the issue of runaway production,” Kyser said. “While there are programs, such as the California First Program, which offers producers incentives to do business in the state, as well as the ongoing discussion in Washington about tax incentives for production companies who work here, we have to constantly remember and think of ways to be as user-friendly to the entertainment industry as we can.”

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